Comcast has dropped its €56.6 billion bid to buy most of Rupert Murdoch's Twenty-First Century Fox media empire.

It paves the way for its rival Walt Disney to acquire Fox's assets instead. Comcast said it would instead focus its efforts in clinching a deal to buy almost 51% of the pan-European TV network Sky.

But the cable group and owner of NBC Universal is trying to fend off a rival offer from Fox, which already owns a 39% stake in Sky.

Brian Roberts, chairman and chief executive of Comcast said: “Comcast does not intend to pursue further the acquisition of the 21st Century Fox assets and, instead, will focus on our recommended offer for Sky.”

Last week Murdoch's Fox made a €27 billion bid to buy Sky, only to be trumped hours later by a new Comcast offer of €29 billion.

The stakes are high for both US media empires as Sky's 23 million pay-TV customers are a big draw.

The bidding battle between Disney, Comcast, and Fox is part of a bigger war to compete with the online streaming giants such as Netflix and Amazon.

Sky’s share price fell 2% on Thursday following Comcast’s news to pull out of the race for Fox. It indicates that investors fear Murdoch may not return with a higher bid now.

Under UK takeover rules, Murdoch has until August 8 to submit a new bid for Sky.